Global Economic History Seminar: ‘The Guggenheims and the Collapse of the Chilean Nitrate Industry, 1925-33’

Monday 16 March brings the last Global Economic History Seminar this term (5-6.30 pm, Audit Room, King's College). 

We are delighted to welcome Rory Miller (University of Liverpool), to talk on ‘The Guggenheims and the Collapse of the Chilean Nitrate Industry, 1925-33’. This topic links Latin American economic and political history with US and British business history. 

Abstract: In retrospect, the challenges facing the ‘traditional’ British-dominated Chilean nitrate industry after World War 1 appear insuperable. They came from two directions: the growth of synthetics following the introduction of the Haber-Bosch process in wartime Germany, and new methods of mining and processing developed by Guggenheim chemical engineers in the 1920s. The Guggenheims purchased older companies, acquired new nitrate lands from the Chilean state, and finally entered a joint venture with the Chilean government, the Compañía de Salitres de Chile (COSACH), in 1931. Managed by the Guggenheims and financed by debt, this enterprise aimed to monopolise the Chilean industry and provide effective competition to the European synthetics producers (primarily IG Farben and ICI). However, in January 1933 a new Chilean administration suddenly dissolved the joint venture. Why did the Guggenheims fail? Clearly the economic and political circumstances of the Depression undermined production and sales, but in this paper we argue that the Guggenheims also made serious miscalculations and underestimated political and economic risk. The outcome was a much diminished industry, the collapse of employment and tax revenue in Chile, and the loss of the investments in nitrate which Chilean entrepreneurs, small investors, and financial institutions in the United States and Europe had made. The Guggenheims never recovered their position in international finance.